Crest Nicholson hit by higher end slowdown

Crest Nicholson (CRST) warned on profits in May, with margins contracting from 19.1 per cent to 17.2 per cent reflecting the housebuilder’s exposure to the higher end of the new homes market. House price inflation at the top end of the market has slowed, whereas build cost inflation remains at 3-4 per cent. However, with some signs of cost inflation moderating, margins for the full year are expected to be at the lower end of an 18-20 per cent target range. The emphasis now is to focus land investment on lower-priced areas, but this is likely to take time, which suggests that the growth outlook for the next year or two will be at the lower end of the sector.